SBI Life Insurance Company Ltd. share price target

SBI Life Insurance Company Limited, is a joint venture between SBI and BNP Paribas formed in 2001, which offers individual and group insurance plans, including traditional and unit linked plans. Its products cover life, health,...

Given the strong distribution footprint of its parent SBI (24k+ branches), improving protection share (1HFY20: 8.8%, +340bps YoY), lowest operating cost ratios (10.4%), improving margins (VNBM: 20.2%) and tailwinds from financialisation of savings we expect SBILIFE to deliver strong FY19-22E VNB CAGR of 20.1% p.a. and RoEVs of ~17.3%. Lower than expected growth and protection share remain a key risk to our call. SBILIFEs 2QFY20 performance continues to be strong with NBP/APE growth of 33.8/48.3%. 1HFY20 VNBM came in at 20.2% (+40bps vs. FY19) and VNB at Rs 5.7bn (+24.6% YoY). SBILIFE is our top BUY with a TP of Rs 940 (Sep-20 EV + 21.1x Sep-21E VNB).

Income from investment was healthy YoY but dipped QoQ to | 2623 crore in Q2FY20. Led by robust premium accretion, opex ratio has dipped to 6.5% in H1FY20 vs. 7.8% in H1FY19. Healthy accretion in premium led to higher policyholder surplus at | 349 crore but higher allocation to policyholders at | 293 crore and provision of | 67 crore relates to exposure to DHFL kept earnings lower than our estimate at | 130 crore. Persistency witnessed...

SBI Life Insurance Company Limited, is a joint venture between SBI and BNP Paribas formed in 2001, which offers individual and group insurance plans, including traditional and unit linked plans. Its products cover life, health,...

Given the strong distribution footprint of its parent SBI (24k+ branches), improving protection share (1QFY20: 11.2%), lowest operating cost ratios (11.2%), improving margins (VNBM: 19.9%) and tailwinds from financialisation of savings we expect SBILIFE to deliver strong FY19-22E VNB CAGR of 19.8% p.a. and RoEVs of ~17.5. Lower than expected growth and protection share remain a key risk to our call. After a strong FY19, SBILIFE continues to deliver strong performance with NBP growth of 52.7% and VNBM of 19.9% (+10bps over FY19). SBILIFE is our top BUY with a TP of Rs 914 (Jun-20 EV + 22.1x FY21E VNB).

Given the strong distribution footprint of its parent SBI (24k+ branches), improving protection share (8.1%), lowest operating cost ratios (9.5%), improving margins (VNBM: 19.8%) and tailwinds from financialisation of savings we expect SBILIFE to deliver strong FY19-21E VNB CAGR of 15.5% p.a. and RoEVs of ~17.5-18%. Lower than expected growth and protection share remain a key risk to our call. FY19 NBP growth of 25.7%, was driven by higher share of protection (NBP: 11.9%, +643bps YoY), which in turn led to adj. VNBM expansion of 140bps to 19.8%. Consequently absolute adj. VNB grew a stellar 22.1% YoY to Rs 19.2bn. SBILIFE is our top BUY with a TP of Rs 785 (FY20 EV + 19.8x FY21E VNB).

SBI Life reported healthy growth in premium at 22.5% YoY to | 11380 crore, led by robust traction in renewals (27.7% YoY) and healthy growth in new business premium (NBP). Traction in both - individual (16% YoY) and group NBP (12% YoY) remained healthy. Focus on protection business has led to a rise in its proportion to ~12% in FY19 vs. ~6% in FY18. AUM growth...

SBI Life Insurance Company (SBIL) reported gross written premium (GWP) of Rs113.7bn (+22.5% yoy, +24.1% qoq), almost in line with our estimate, supported by annualized premium equivalent (APE) growth of 16.8% yoy to Rs30.4bn. Value of new business (VNB) margin was 17.7% (at gross-tax), 10bps below Emkay est. (+150bps yoy and +20bps ytd). Product mix boosted margins 300bps yoy, while...

Premium growth remained strong at 35% YoY to | 9141 crore, led by 39% YoY traction in renewal and healthy growth in new business premium (NBP), particularly single premium that rose 121% YoY. Traction in individual business remained healthy at ~16.8% YoY while group business witnessed higher growth at 124x YoY to | 1016 crore. Protection business witnessed robust traction of 213% YoY On an annualised premium equivalent (APE) basis, NBP APE increased 12.8% YoY to | 6600 crore for 9MFY19, led by higher...